Sony may cut smartphone sales target again

TakashiMochizuki

TOKYO-- Sony is considering slashing its smartphone sales target again, people familiar with the matter said Wednesday, as the business struggles to perform as expected in the face of fierce competition especially in emerging markets.

The Japanese electronics giant is likely to trim its smartphone sales target by several millions of units from the current goal of 43 million for the 12 months to the end of March 2015. A lowering of the sales target would be the second downward revision of the forecast in the current business year started in April. The original goal was 50 million, which many analysts said was too optimistic.

The planned move stems from Sony's plan to reduce its presence in some markets, especially emerging nations such as China, by pulling its entry-level handsets.

Sony disappointed investors in September when it announced it would write down Yen180 billion ($1.68 billion) of the smartphone segment's business value and lowered the earnings forecast for the current business year to a Yen230 billion net loss, almost five times what it said previously.

For Sony watchers, the latest plan won't come as much of a surprise, as company executives, including chief executive Kazuo Hirai, have been signaling it will downsize its smartphone business in some countries after concluding that introducing entry-level models for emerging markets was a mistake. Sony plans to hold a meeting with investors in November, and Chief Financial Officer Kenichiro Yoshida said details of how it will update the smartphone business plan would be unveiled there.

Sony's Xperia smartphone business was once a star player for the company, but is now experiencing trouble. It has been hit by the emergence of Chinese makers of cheap handsets, while it continues to struggle in competition against market leaders such as Apple and Samsung.

The Xperia will remain a core business for the company along with image sensors and the gaming business, but Mr. Yoshida has said at news conferences that the smartphone segment will focus on high-end models and won't seek a major share of the global market.

Mr. Hirai said in September that Sony would cut 1,000 employees, or 15% of the global smartphone business workforce, by March. Some analysts said the cut wasn't enough to turn around the segment.

Sony announces its earnings result for the July-September period on Oct. 31. While analysts expect a net loss due to the Yen180 billion smartphone charges, they say it is unlikely the company will again revise down the earnings forecast for the year for the company as a whole.

New York hedge-fund firm Third Point LLC, which unsuccessfully sought a partial spinoff of Sony's entertainment business, said Tuesday said that it had sold its stake in Sony for a return of nearly 20%, saying in a letter to its investors that "more urgency" was necessary to "definitively turn around the company's fortunes."

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